Why Use Business Credit Card and not a Personal Credit Card for Your Start-Up?

Updated on: 10 Jan 2024 // 4 min read // Credit Cards
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Now that you have established your start-up venture and are working hard towards making it a success, there are a few important aspects that you must pay attention to. Apart from sales and marketing, there are several other important facets of running a business. A crucial part of your business which can determine the success or failure, in the long run, is the way you handle your finances. Whether you are engaged in the manufacturing industry or service industry, you must always have a firm hold over the state of your finances. While maximizing your revenue is the most important goal of your business, the way you manage your expenses is also very important.

As it is a start-up venture, you will not be having very deep cash coffers and might be thinking about using a Credit Card to take care of the business-related expenses. Well, if you are indeed contemplating using your personal Credit Card for your Start-Up venture, then stop right here. This would be an unwise move, which can have long-term implications. Instead of using your own Credit Card, you must use a Business Credit Card for all commercial expenses.

What is a Business Credit Card?

A Business Credit Card is a Credit Card issued for use by a business or a commercial entity instead of an individual. The basic concept of a business card is to enable business owners, or management keep a better track of business expenses. All the features offered with a Business Credit Card have been designed with the needs of businesses in mind.

The process of obtaining a Business Credit Card is quite similar to that of a Personal Credit Card. You must submit an application with a Credit Card company along with supporting business documents as specified. The company will evaluate your application according to its eligibility criteria, and if found appropriate, a card will be issued for your business.

Why use a Business Credit Card instead of a Personal Credit Card for business operations?

If you are still contemplating between choosing a Business Credit Card or a Personal Credit Card for the expenses related to your start-up venture, then here are some of the major benefits of Business Credit Cards that you must have a look at:

1. Easier to obtain:

When your business venture is relatively new, not many lenders are willing to offer you an unsecured Business Loan. In such a situation, applying for a Business Card makes a lot of sense. With relaxed eligibility criteria and quick processing, Credit Cards are easier to obtain for new businesses. Moreover, a Business Credit Card helps you create a credit history for your business which opens-up other financial avenues for the future. For instance, you can obtain a Bajaj Finserv Credit Card for your business easily with the minimal documentation and quick approvals offered by the company.

2. Easy to account for expenses:

When you use a dedicated Business Credit Card, it is easier for you to keep your business and personal expenses separate. This not only allows you to keep a better check on your business expenses but also makes it easier for you to prepare your Income Tax returns at the end of the year. You can spend lesser time on record keeping and dedicate your time to other important business matters.

3. Better benefits:

Business Credit Cards offer you significantly higher benefits as compared to Personal Credit Cards. Given the high volume of transactions, you earn more reward points, a higher number of Airport Lounge access, higher lost card protection, better cashback deals, and discounts on timely payments. Overall, these benefits combine to deliver you significant benefits as compared to a Personal Credit Card. For instance, when you avail an HSBC Credit Card such as HSBC Premier Mastercard Credit Card for your business, you get a lot of benefits which are otherwise not available to individual customers.

4. Higher spending limit:

During the initial stages of your Start-Up, you need to incur higher expenses as you are supposed to purchase many things such as machinery, tools, furniture, laptop, electronics etc. As Business Credit Card come with higher limits, you can easily purchase the assets you require for business without any delay. Moreover, you can later claim depreciation benefits against most of these assets.

5. Control on employee spending:

If your business requires your employees to travel frequently, then using a Business Card can help you control over-spending by the staff. You can easily keep a tab on the type & volume of expenses. Many Credit Card companies offer corporate Credit Cards for the employees of the business. You can set a limit on these employee Credit Cards and exercise better control over the spending.

6. Better discounts and deals:

You can get a Business Credit Card that rewards you for your frequent expenses. Air ticket booking, hotel booking, paying for advertising, restaurant bills, etc. are some of the expenses against which you can get better deals and discounts by using your Business Credit Card.

7. Longer interest-free period:

Business Credit Cards come with interest-free periods of up to 60 days. This offers you excellent flexibility in terms of your finances and allows you to make high-value purchases even if you do not have enough money in your bank account. Though, you must remember to make timely payments for your Credit Card bills.

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